Demand's going down, so too the number of growers — but far worse may face this pillar of national culture

Atsuo Aoki doesn’t appear to be an irrational man. At 52, he works in the banking division of the Japan Agricultural Cooperative (JA) in Matsumoto, Nagano Prefecture, an old castle city at the foot of the Japan Alps about three hours by rail north of Tokyo. He lives there with his wife and three children in the house where he grew up, keeps his garage impeccably swept, and answers questions in a calm and measured voice.

But when it comes to the 1.2-hectare rice farm to which he has devoted an average of two weekends each month for the past 30 years, an economist might well be tempted to call him crazy.

Take his new combine, a shiny blue-and-white Iseki HVF 220. Aoki bought the machine last year because it shoots harvested grain directly into his truck via a long arm, rather than pouring it into bags that must then be hand-loaded, like his old model. He paid ¥3 million for the labor-saving machine. With annual farm profits of about ¥200,000, Aoki will be in the red for next 15 years.

That doesn’t seem to bother him. His six small fields have been in the family for generations, and for Aoki, filial duty far outweighs economics.

“The land is my property, so I take care of it. Yes, it’s an expense, but it’s part of the soul of this household,” he said, sitting cross-legged in the parlor of his 50-year-old post-and-beam farmhouse on a recent winter’s day. He added that he also liked being able to grow food for his family.

In many ways Aoki is a typical Japanese rice farmer. Like him, most of the 40,000 men and women who provide this country with its staple grain are working small, fragmented plots of land while holding down off-the-farm jobs. Many are retired and few are young, yet together they grow nearly all the country’s rice (overall food self-sufficiency, on the other hand, stands at a mere 40 percent).

For half a century, Japan’s rice farmers have been receiving subsidies and other incentives meant to keep them on the farm. Still, costs are high, profits low, and future prospects shaky.

On top of that, Japan is now considering joining a sweeping new free trade area that would expose rice farmers to unprecedented international competition. Proponents say the deal would boost the country’s beleaguered manufacturing sector. But rice, which has long been sheltered by sky-high tariffs, would take a hit — and that’s put the farmers who grow it at the center of a passionate public debate over agriculture, protectionism and Japan’s role in the world economy.

Are they uncompetitive stragglers who hold back globalization, as many economists suggest? Or, as others contend, are they vital guardians of rural culture, national identity and food self-sufficiency who deserve all the help they can get? If change is necessary, what form should it take?

With Prime Minister Naoto Kan pushing for a decision on joining the free trade area by June, it looks as if Japan will have to come up with some answers very soon.

The international trade agreement that has thrust rice farmers to the center of attention is called the Trans-Pacific Partnership, or the Trans-Pacific Strategic Economic Partnership Agreement (TPP). The original TPP agreement between Brunei, Chile, New Zealand and Singapore took effect in 2006, and five other Pacific Rim countries — Australia, Malaysia, Peru, Vietnam and the United States — are now in membership negotiations. Last October, Kan announced that Japan would consider joining as well.

The TPP is unusual in that it would require member countries to abolish all tariffs over a 10-year period. In contrast, the World Trade Organization and other regional trade agreements have allowed tariffs to remain on certain products. Currently, Japan imposes a tariff of ¥341 per kg on all imported rice; depending on the country of origin and its production costs, that can amount to more than 700 percent.

Removing that tax would put farmers in direct competition with foreign growers, who almost always have much lower production costs. According to Masayoshi Honma, an agricultural economist at the University of Tokyo, under the TPP the U.S. would likely be the prime source of increased imports of the sticky, short-grain japonica rice (Oryza sativa var. japonica) most popular in Japan. Average farm size in the U.S. is currently 100 times larger than in Japan, and high-quality rice enters the market at about half the price it does here, Honma said.

The Ministry of Agriculture estimates that unless the government filled that gap with subsidies, then joining the TPP would send rice production in Japan plunging by 90 percent — and erode overall food self-sufficiency to just 14 percent.

Although Honma said the ministry’s numbers are seriously overstated, in part because they are based on outdated commodity prices, Kan’s announcement has provoked strong responses from politicians, farmers and the general public alike.

“If we let this chance go, we risk being left out of global growth and prosperity,” warned Hiromasa Yonekura, chairman of the Japan Business Federation (known in Japan as the Keidanren), in a speech last November. His organization is urging the government to restructure agriculture along with liberalizing trade. Others have suggested the farm sector might actually benefit from international competition.

“Even if we don’t join the TPP, Japan’s farmers are in big trouble. A lot of people say joining will be like shock therapy — that with zero tariffs only the strong farms will survive,” said Nobuhiro Suzuki, also a professor of agricultural economics at the University of Tokyo. He sees that position as unrealistic, however.

“Suddenly going from 700 percent to 0 percent is too extreme. Before a strong agriculture sector has a chance to develop, everyone will be wiped out,” Suzuki said. He added, however, that farmers in areas with a reputation for especially tasty rice, or those who use organic methods, would likely be spared due to consumer loyalty.

Politicians have suggested that if Japan joins the TPP, they will push for increased subsidies. Already last year, farmers began receiving direct income support of at least ¥150,000 per hectare of rice. They are also paid to reduce rice production in line with a policy intended to limit supply in the face of steadily falling demand.

But Hirofumi Kobayashi, an agriculture-policy specialist with the politically influential Central Union of Farm Cooperatives (JA Zenchu) said growers would be foolish to rely on promises of direct income support should the TPP go through.

“Japan is in huge debt. The government can’t indefinitely fill the gap in prices between Japan and the U.S. or Australia,” he said. His organization has launched a national campaign against joining the TPP — which, if it caused some farmers to go under, could drastically reduce JA’s 4.8-million-strong membership.

Even Kobayashi, however, is willing to admit one thing: TPP or no TPP, Japan’s small, inefficient rice farms and their aging owners can’t survive much longer in their current form.

One future blueprint for Japanese agriculture can be found on Chiharu Tezuka’s 100-hectare rice, barley and buckwheat farm 30 minutes south of Matsumoto in the city of Shiojiri. Like Aoki, Tezuka, 63, grew up on a small family farm. After graduating from high school he left to become a nurse, but says he soon became frustrated with the limits of that occupation.

“In medicine, the doctor’s always at the top. And when you’re not at the top, there’s only so much you can do,” he said in a recent interview in his office adjoining a two-story-high building full of towering hoppers, chutes and mills for processing rice.

When he was 30, Tezuka explained, he read a serial novel in a newspaper about an organic farmer, decided that was the life for him, and returned with his wife to the 2.1-hectare family holding to try his hand at natural farming.

It was a disaster. The weeds took over, the harvest was paltry, and he wasn’t making enough to get by. Then he joined a local agricultural machine cooperative and discovered big tractors.

“I though, hey, these are efficient, and they’re pretty cool too,” he recalled. He soon decided to abandon organic methods and scale up his farm.

When a freeway and high school were built nearby, he sold some of the family land and used the money to buy his own tractors and build a processing plant. Local farmers started bringing their rice to him to dry and polish, and some of them offered to rent him their fields as well. He took whatever they offered.

Then in 1991, Tezuka incorporated his farm. Mostly it was a tax-related decision, but there were other benefits as well: Chatting with the salesmen who started dropping by on winter afternoons; joining the Rotary Club; and being treated as a businessman, not just a farmer.

Before long, Tezuka’s holdings had expanded 50-fold in area, far surpassing the national average farm size of 1.9 hectares. He was cultivating 800 separate fields rented from 300 different families, working days that started at dawn and ended after dark. He added a flour mill and hired eight employees, including two of his sons. He hopes they’ll soon take over management — and says he won’t be surprised if they do.

“Kids don’t want to stay on small farms where there’s no profit. But around here, on the big farms, they often do stay,” he said. “Sometimes, in good years, we make a pile of money. Once you’ve experienced that, it’s hard to quit.”

Many advocates of agricultural reform say the pattern of expansion and corporatization that Tezuka has followed could help strengthen Japan’s ailing farm industry.

“The agriculture sector is declining in competitiveness. We need both political and agricultural reform,” said the University of Tokyo’s Honma. “We should expand the scale of operation, particularly for rice production.”

To an extent, government statistics back up the claim that big farms make more economic sense. These show that while farmers who cultivate between half a hectare and one hectare are spending more and more of their income on inputs, farmers working between 10 and 15 hectares are spending less. And so-called business farm households (defined as those earning more than half their income from farming) reap about three times the hourly return on labor of commercial rice-growing households as a whole.

To encourage expansion, the Agricultural Land Act was revised in 2010 so that joint-stock companies would be able to rent land more easily. Recently, the governing Democratic Party of Japan has also proposed giving an extra subsidy to larger rice farmers, while for its part, JA is encouraging elderly village farmers to pool their land in cooperatives.

Corporate and cooperative farms together now represent 1.6 percent of all the farms in Japan. However, Honma noted that tax breaks, laws that limit the sale of farmland, and subsidies still provide a strong incentive for smallholders to hang onto their land.

His colleague Suzuki, on the other hand, said there are physical limits to how large Japanese farms can grow.

“Expansion is a good thing. But no matter how hard we try, we’re not going to be able to compete with 300-hectare rice farms in the United States,” he said. Obstacles to consolidation include roads, houses, entrenched ownership — and the fact that mountains make up two-thirds of the nation. In addition, large-scale government projects have already expanded and squared-up most paddies; further field expansion would in many cases be difficult or very expensive.

Meanwhile, for large-scale farmer Tezuka with his 800 separate fields, costs remain high and profits slim. Last year he sold about ¥60 million of grain, but said he would have been in the red without subsidies. Still, he’s most concerned for his smaller counterparts.

“In Japan there are lots of places where you can’t use big machines. We need to protect those small farms, too,” he said. “Agriculture is the basis of the nation. It’s like the wall around the castle. You need big stones, but without the little stones in the wall too, the whole thing crumbles.”

An hour north of Tezuka’s farm in the town of Azumino, 48-year-old organic rice, buckwheat and vegetable farmer Masahiro Hosoi has staked his future on a radically different approach to farming from that followed by either Aoki or Tezuka.

Hosoi is a relative newcomer to his current line of work. Until about 10 years ago, he and his family lived in a nearby city where he worked as an industrial products salesman. Then the family moved back to the farm where his wife, Chieko, had grown up, and Hosoi started thinking about a career change.

“There were lots of fields near the house, and walking around I started to remember how I used to play in the paddies as a child. After the harvest we’d use them as a baseball diamond or a place to fly kites,” he said.

Now, however, the scene was different. “The paddies had been neatly modernized, but there were fewer animals. It was almost to the point where I wondered if there was any life out there at all.”

Pretty soon, Hosoi decided to quit his office job and take over his in-laws’ farm. He started from scratch, learning from farmers nearby and gradually expanding from 3.5 to 6.6 hectares. Unlike Tezuka and Aoki, who both rely on chemical fertilizers, herbicides, and pesticides, Hosoi decided to stick with a mix of low-chemical and completely organic methods. As a result, he said, life is starting to come back to the fields.

“There are dragonfly larvae, tadpoles, worms, fairy shrimps, loaches, herons and ducks. It’s obviously different now. I’ll be driving the weeder along in the paddy and suddenly fall into a hole, and it’ll be a duck nest,” he said.

Hosoi’s eco-friendly practices yield less due to weeds, but they do bring economic benefits: ¥700 per kg of his organic rice sold over the Internet, compared with the ¥200 or so that Aoki gets when he sells his conventional rice through JA, which handles about 60 percent of Japan’s rice harvest.

From the start, though, Hosoi said he realized he’d need to find an even more secure sales route if he wanted to survive. So in 2009, he and Chieko opened a small restaurant selling onigiri (rice balls) and soba (buckwheat noodles) made using their own grains. They both put in about eight hours a day at the restaurant, and on top of that Hosoi spends another seven or eight hours a day working on the farm during the growing season.

All this is currently bringing in half the income that Hosoi’s old sales job did — and half what Chieko’s father earned back when rice sold for a higher price and costs were lower. But Hosoi doesn’t plan to quit — or scale up — any time soon.

“As you expand, you need to use more chemicals because you can no longer depend just on human hands. The national government wants to push expansion, but personally, I don’t think it’s a good idea,” he said. Instead, he’s counting on the growing local-food movement to protect him from cheap imports. “Even if prices go down overall, I think there will be demand for good local products,” he said.

Aoki, Tezuka and Hosoi represent three possible futures for rice farming in Japan, each with a different strategy for weathering the storm of market liberalization they realize is probably coming.

Aoki is banking on his small size and primary non-farm income; Tezuka on his ability to keep costs down through economies of scale and provide a range of services; and Hosoi on customers who want to buy his locally grown organic rice at whatever the price he has to charge.

But what about the fourth option — the one not even the most trade-hungry politicians are willing to mention? What about letting Japan’s farms fade slowly into quaint anachronism, like wooden tabi (clogs) and paper parasols?

On that topic at least, the three markedly different kind of farmers share a single opinion: It’s absolutely, categorically, a very bad idea.

For Tezuka, the principle is so basic that he had trouble putting it into words. “It’s not right to let the farmland in your country go to seed,” he finally declared. “It’d be like living in the middle of a garbage pile.”

For Hosoi, it has to do with culture and environment. “From long ago, life and agriculture have been tied up together in Japan’s rural communities. There’s the culture, the biodiversity, the landscape; in order to preserve those things, we’ve got to preserve agriculture. It’s a spiritual question,” he said.

And for Aoki, it comes down to self-sufficiency. “Without farmers, a country isn’t able to feed itself. Is that really okay? More and more, people are sacrificing that ability for the sake of money, and it makes me uneasy,” he said.

Granted, those are not surprising responses from men who stand to lose their way of life should Japan’s rice farms disappear. But then again, when it comes to farming, they just might know what they’re talking about.

As for the wider public reaction if a Japanese government were ever to effectively kill off rice-growing in favor of wider international business considerations — well, that would be a moment of truth.